Deciphering public liability insurance

PLI is one of the most important policies a tradesman can have – but understanding all the terms contained within them can be tricky; that’s why the helpful guys at Builtin have provided a list of definitions to make things a bit clearer.

PLI is intended to protect you from the cost of accidentally damaging other people’s property or causing them injury.

This article is intended to clarify some of the definitions contained within most general/public liability policies available from major insurers in New Zealand. The specific wording from different insurers will vary and you should seek the advice of an insurance professional, if necessary. Insurers will interpret and apply their own policy wording, depending on the specific circumstances of each individual claim.

Damage/property damage

For a claim to be made, there must first be either accidental damage to property, loss of property (that isn’t actually damaged) or loss of use of property.

Event/occurrence

For a claim to be made, the accidental damage must result from a single event. This event must be unforeseen and unintended from the standpoint of the policy holder.

Faulty/defective workmanship

Unfortunately, there is no accepted insurance definition of faulty workmanship, which is why it can be such a contentious issue at claim time. Was damage caused accidentally or as a result of poor workmanship? Your view might be quite different from that of your insurance company. If your policy does not include cover for faulty workmanship, you could find your claim is declined.

Consequential loss/resultant damage

The policy can also cover the indirect costs of damage you cause: eg, the cost of lost sales due to a power failure, if you cut through a power cable, or the subsequent water damage to walls and carpets caused by a leaky pipe.

Insured’s products

Your own products are not covered by the policy. This can include anything you have constructed once it is no longer in your possession or control. It’s important you have a policy that is tailored to the building industry, otherwise your liability for damage to a house you’ve built could be excluded from cover.

Note: This article is not comprehensive nor is intended to be legal advice, or a substitute for legal advice.

About Builtin New Zealand

Builtin New Zealand is a specialist in construction insurance, with policies tailored to meet the needs of builders & tradespeople, including cover for faulty workmanship and damage to the building you’re working on. For more information visit www.builtin.co.nz/Insurance or contact Ben Rickard at ben@builtin.co.nz or 0800 BUILTIN.